So she's just behind in her mortgage and probably has a notice of default or whatever the procedure is in Florida.Your ability to get a loan for the home has nothing to do with her payment history on the home.  

Unless there is a history of STRs in the property already and you have experience with STR, you really wouldn't be able to supplement your income with that. 

If you're using traditional financing on your primary residence, they're going to do another credit check on you just before closing.

However, tenant's credit history will take a dive and be on record and since I'm the property manager (me / owner), I will not vouch for tenant when seeking for a place to rent in the future.If I go with option "b" and the tenant / tenant attorney agrees and signs an agreement to make it official , at least I can get back my money within 10-15 years.

A couple questions:1) Has anyone worked with local lenders like a local bank or credit union?

Also no credit reporting, so I signed up for Landlord Credit Bureau at my expense.Hope this helps, for now I’ll be staying with Hemlane.

Yes, your rate will change but not much if you have good credit it will go up around 5.875% to 6%.

It was a personal referral, received a credit at closing for renovations as well How did you finance this deal?

Credit!

More on DSCR loans in case helpful: DSCR loans won't use your income to underwrite the loan.DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.